Archive for the 'Info For Buyers' Category
Ask for references? What a concept!
Background
When I began my business of representing buyers as an Exclusive Buyer’s Agent (EBA) twenty years ago I made a commitment that every consumer for whom I would work would be on my “reference” list unless they specifically requested otherwise. None have made that request. I think that they too feel an obligation to pass on their experience. I felt that consumers deserved the opportunity to talk to prior clients in order to make an informed decision regarding their representation.
How many references is enough?
I suggest asking for the contact information for all clients for at least the prior 24 months. That will address several questions. First, how active is the licensee? If that list is much below 20 clients, you may be working with someone who is either not very active in the market or is new to the business. Everyone has to start somewhere so if it is the latter and the person is new, suggest that you also get to meet their “mentor”. You need to know what kind of support will be available to a less experienced licensee. If the person is “experienced” and just not active with representing buyers, you may want to consider continuing your search and find someone who is.
Okay, I have the references. What is next?
You can ask the prospective agent to indicate which buyers purchased in a similar area and/or price range and, if it is your situation, which were first-time buyers. You will probably benefit more from talking to buyers whose situation is most similar to yours. Questions to ask include: Was the broker readily available? How long did it take for calls to be returned? Did you ever feel pressured to make a decision before you were ready? When going through houses did the broker identify potential problem areas while also identifying stand-out features? Did the broker complete and explain a market analysis for the property on which you were offering? Did the broker have a list of inspectors for you to consider? Did the broker attend the inspection? How did you feel about the advice regarding the Inspection Notice and the broker’s follow-up regarding inspection corrections? Did the broker attend the closing and provide answers and guidance? And finally, would you engage the broker for your next purchase and recomment him/her to your sister and/or to your best friend?
How many should I call?
Enough to be satisfied with the results. Probably four to six. If someone was not satisfied try to find out why and ask others about the same issue. It is possible that it was a one-time occurrence so factor that into the overall responses.
The result.
You should now have evaluated the prospective agent’s resume’, interviewed references and had an in-person interview. You are the “employer”. You can now make and informed decision and hire the person who will best meet your needs and expectations.
If you want to consider a person for the important position of representing your real estate interests, please consider me as your EBA.
Russ Murray 303-721-1100 russ@buyerbroker-denver.com
Why Evaluate HOA Financial Documents?
The “Situation”
If you are purchasing a home in a community where the HOA is doing more than just maintaining some common areas and scheduling trash pick-up then you want to carefully review the financial condition of your association as a part of your contractual due-diligence. In Colorado this is included in the State mandated contract although you may want to get more questions answered than the minimum information that is required therein.
It has been my observation for many years that builder/developers grossly underestimate the dues and do so almost intentionally in order to attract buyers. With new construction I always ask to see the basis for the budget and it is usually “unavailable”. If you buy into a new community and move in less than ten years you will probably not have a problem. It is at this ten-year plus point when major components begin to wear out that the residents begin to find that the “reserve for replacement” line item in the financial is really important.
What To Look For and Ask
You can learn a lot by walking through your prospective community and looking at the condition of the buildings and landscaping. Is there peeling paint, curling roof shingles, deteriorating paving and/or dead or poorly maintained grass and shrubs? If the answer is yes to any of those questions, you may be looking at a community that has insufficient cash flow to keep up. The result will be dues increases and/or “special assessments”.
So if you are buying into an existing community it is that, or a similarly named category, that you need to review carefully. You should be able to learn from the property management company how much they are forecasting to need and how that relates to what is currently in the account. Ask if there have been recent “special assessments” and if any are anticipated. Have there been recent dues increases and/or recommended increases? The reality is that most documents are written so that the increases are limited unless approved by a super-majority of the residents so it is responsible for the board to apply the maximum every year to try to stay ahead.
Avoid Surprises
Do not allow the seller or the management company to evade your questions. If you become uncomfortable with the answers and information then exercise your right to terminate the contract. I have a questionnaire available for my clients that we have the seller submit to the management company that addresses many of the above questions plus other important issues. If you would like the assistance of an experienced broker who always and only represents the interests of his buyer/clients, please contact me.
Russ Murray 303-721-1100, ext. 1 russ@buyerbroker-denver.com
Denver Home Prices Up Again
This Information From Case-Shiller
If you are reading this on a regular basis you may recall two facts regarding my opinion of “trend reporting”. The first is that what you really need to know about is your neighborhood, not the metro area as a whole. The second is that the index that I trust the most is the one from Standard & Poor’s/Case Shiller because it tracks “same house sales” and thus is not skewed by more expensive or less expensive homes being sold in a given period.
Denver Shows 1.2% Increase in December 2010
This “increase” is a comparison to December of 2009. While this may not tranlate into results for your specific neighborhood, it begins to become significant for two reasons. First is the obvious. For those of us in the market, up is certainly better than down. Second, and perhaps more important, it is the second consecutive month to show an increase. I am not enough of a statistician to know whether or not that is an official “trend”, but with the 0.5% increase in November, we are looking at two up months with the December increase more than double November’s. With the first-time buyer incentive having been scheduled to end on November 3oth, (It was subsequently extended, but not in enough time to have a major effect on December closings.) the December increase is more “market” driven than “incentive” driven.
Watching The Market Through A Rear-View Mirror
This information has value to you if you are considering purchasing your first home or making a move up. This the third real estate recession that I have lived through in my professional career. With each of the first two, the price increases were the most significant during the early part of the recovery which kind of happened while I was not looking. My best observation right now is that we will begin to see that increase sometime in the second half of 2010. Watch for the local employment figures to improve and see if the same index shows year-to-year increases again for January. If that occurs then the time to buy will be in 2010. If you are hoping to benefit from the ”first-time buyer” or “existing owner” purchase tax credits you have until April 30, 2010 to be “under contract” to receive full benefits. You will want to read the specific statutes that are applicable to your purchase.
What help should I have for my purchase?
You will want a broker who is committed to your interests. That is typically an Exclusive Buyer’s Agent (EBA). EBA’s always and only represent the interests of buyer-client and never list and sell homes. I am an experienced EBA and would be happy to discuss your real estate needs in the Denver area.
Russ Murray 303-721-1100, ext.1 russ@buyerbroker-denver.com
Considering New Construction In The Denver Area?
New Can Be Nice!
What have the builders done?
Well, if we take a look back to the beginning of the decade, single family new construction starts were at 15,000 units per year. For calendar year 2009 the new start figure was 2,400 (not a misprint). That is a huge reduction. It does indicate that this time around the builders are not getting so far ahead of demand that they have huge amounts of excess inventory. It is also significant to observe that several large regional and national builders have left the denver market. Many smaller builders are simply out of business.
How does that affect you as a potential new home buyer?
If you have your heart set on a new home where you get to select a site and all of the options and and finishes, then you should expect that you will be paying more than if you purchased a very similar home constructed in the last 3-5 years. How much more will depend on your negotiations with the builder. They builders will not build below cost, but they do want to keep their activity, employees and subcontrators busy so will build a lot closer to “cost” than in the past. If you find a new home that is esentially complete, there may be some room to negotiate price, additional upgrades or perhaps landscape.
Is there a better/best decision?
Over a 3-5 year ownership, you will probably be ahead by negotiating a purchase of an existing newer home. It will probably have basic landscape and window coverings in place and components should not be “wearing out” over that period.
How can I make that determination?
With an experienced agent on your side you can evaluate both options and then know what the financial difference is between the new vs. the existing. For some buyers, the incremental cost of “new” is simply worth it.
You can contact me for assistance. I am familiar with the builders and how to negotiate with them.
Russ Murray 303-721-1100, ext. 1 russ@buyerbroker-denver.com
Highlands Ranch $350,000 to $450,000
From time to time it is instructive to look at an area from a more “micro” perspective. If you have read some of my posts then you know I really do not like “Denver” statistics because they so often hide neighborhood data on which consumers really need to be making decisions.
So, looking at 2008 vs. 2009 Highlands Ranch activity with the broad brush, we find a reduction in total sales 2008-2009 from 1592 to 1359 (down 15%) with average and median prices remaining pretty constant for both years at $341,000 and $301,000 respectively. The average price per square foot dropped from $158psf to $155psf (down 2%). Lets take a look and see if the $350,000 to $450,000 segment performed the same.
This segment represents about 20% of the homes sold in HR for both years. The average and median prices were both down a relatively insignificant 1% but the price per square foot dropped by 5%; more than twice the rate of the market taken as a whole.
There must be some meaning here.
With relatively level average and median prices, the reduced PSF figure for the overall HR market indicates deterioration in that market with buyers able to purchase larger homes for the same price as the prior year. With a doubling of that PSF figure for the $350-$450 segment, we can conclude that this price range is not doing as well as the overall HR market. That should make for better opportunities for buyers.
I am curious about your specific experiences so leave a comment or give me a call.
I will address market segments in HR and in other markets in future posts.
Russ Murray 303-721-1100, ext. 1 russ@buyerbroker-denver.com
Whose Figures to Trust?
Which Trend to Believe?
Which Trend to Believe?
There are many sources.
Many local media use figures from the MLS as compiled by a real estate broker and information from industry trade groups. As I read those reports, particularly beginning in late 2006, it was clear to me that the “compiler” was looking at the figures differently than I was seeing the same data. I was reporting in my monthly communication to my clients that I was seeing a slow down in volume and in price increases and many other licensees were talking about price increases and the strong market. Going into 2007, I was very busy while at the same time seeing more inventory and more negotiation. My clients were able to make decisions based on what was really happening, not what was reported.
All real estate is local.
Yeah, I know you’ve heard that about politics too. It is at least equally so for real estate. Even with the overall decrease in Denver area home values over the past few years there are pockets that have done much better along with those areas that have fared worse thant the averages. What you care about is the neighborhood where you are living or purchasing. Be certain that if you are purchasing that your broker evaluates your prospective home using sales in the immediate area. It is very easy to go outside and support a higher price. If you have been diligent in your reasearch and hired an Exclusive Buyer’s Agent (EBA) then you should have someone on your side who will be doing just that.
Area trends do have value.
It is worth knowing what is happening in the overall market as those trends can have some effect on all neighborhoods and are an indication of the condition of the area economy. So, back to the original question, whose figures to believe? I have looked at reports based on MLS data, Zillow data and Standard & Poors/Case-Shiller data. It is my opinion that the “S & P/Case-Shiller” methodology and therefore the results are most accurate. It is the only system that tracks “same house sales”, has built in filters for anomolies and considers whether the sale is a “lender/seller” or a consumer seller. The other two consider all sales and can be skewed by several extremely high dollar sales or by a proliferation of non-market transactions.
So, what is happening in the Denver area?
According to Case-Shiller, Denver is one of only four of the twenty cities that they track that showed overall price increases from November 2008 to November 2009 (The most recent month that has been released). Overall, the Denver changes show considerably less “swing” than does the 20-city index. Also, and very interesting’ is that the same graph is heading into positive territory.
Is it a good time to purchase in the Denver area?
Probably so for many neighborhoods. Check your target area very carefully as there are still areas where values continue to decrease. Better yet, engage me to assist with your purchase and know that I will always be on your side.
Russ Murray 303-721-1100 russ@buyerbroker-denver.com
Where is your fire-extinguisher?
An Important "Accessory"
Is your answer “I don’t have one”?
You can fix that within a few hours and make your home and family that much more safe. Rated extinguishers can be purchased for $20 and up. What’s your excuse now? Please head to your local hardware store or “big-box” and correct this oversight right now.
What should I buy?
My suggestion is at least two, and maybe three. Put the first in an easy to reach location in the kitchen. That is one of the most common locations for home fires. Check on the extinguisher and/or with the retailer for a kitchen fire compatible unit. The second place is in the garage. You have more room here so you may want one that is a little larger and designated for the types of materials stored in the garage. The third? Perhaps on the second floor if you are in a two-story house or near the grill on the patio.
Next Step
Make sure all members of the family know where the extinguishers are located and how to use them. You may find that your local firehouse will have some training available. Here is a You-Tube FEMA video as a starting point.
Really Important!
The first two steps if you have a home fire do not include using the extinguisher. FIRST, call 911 and alert the fire department. SECOND, get everyone out of the house. THEN put your extinguisher training to work.
Want an agent who really cares about these issues and about you?
Call me. I am an Exclusive Buyer’s Agent with significant experience in all of the Denver area markets. Your interests are always first.
Russ Murray 303-721-1100, ext 1 russ@buyerbroker-denver.com
Home Purchase – Seller Disclosures And Inspections
Very Important
Our Offer Was Accepted – What Now?
(This information is written for Colorado consumers. It may or may not be applicable in other states.)
Great! You are “under contract” with a number of contingencies in the agreement that are there to protect you. One of the most important is the inspection contingency. It is time to exercise your due-diligence. You either have or will shortly receive the “Seller’s Property Disclosure”. This is the multi-page document in which the seller identifies the condition of various components of the property. When you sign it, you are acknowledging receipt of the document but NOT accepting any of the conditions contained therein.
Do Sellers Always Tell The Truth?
Roof! Roof! (Not Woof! Woof!)
What is this about and Who should read it?
Okay, if I have your attention, you will find useful information here whether you are evaluating the roof on an existing home or ready to replace the roof on your current house. And it is important. A good roof not only adds value to your home but also is the first protection of the structure itself.
(As with most of my posts, this information is relevant to the Denver, Colorado metro area.)
What types of roofs are out there?
The most common roof is a 3-tab composition roof. These are typically installed over rolled on asphalt impregnated felt paper. The shingle itself is asphalt based with fiberglass granules as a surface protection. Typical life expectancy is 20 years.
Next in the “composition” roof family is the “architectural grade” composition roof. The materials and installation are similar to the 3-tab but the shingles are laminated so that there are two layers. This product is sometimes known as a “bi-laminate”. The two layers provide a heavier shadow line and longer life. You can figure 25 to 30 years for this roof. In this same category is the “tri-laminate”; similar but with three layers and a potential 35-50 year life span.
Frequently in use for both new and replacement roofs is a lightweight concrete tile product. While the system is ”light weight” for tile, it is heavier than composition roof material and the structure itself must be evaluated by an engineer before installation. Many of these roofs come with a 50-year warranty. Your insurance will be much lower than with other options; in many cases low enough to recapture the incremental cost over architectural grade composition in just a few years. One “negative” to consider with this roof system is that it is quite east to break the tiles when walking on them so be really careful during any maintenance operation. You always want an experienced installer. In the case of tile that become even more important as some installers will attach the horizontal ”battens”, over which the tiles are installed, without either shims or vertical battens. While an “approved” method, it is likely to shorten the life of the roof as the horizontal battens, if not raised, will trap water and deteriorate faster.
You may have, or see on your prospective home, hand-split wood (usually cedar) shakes. For many years this system was considered an upgrade from a composition roof and certainly has the heavy shadow line that many people like. This is NOT a good roof in this area. It was not bad when a “heavy” shake meant 3/4″ to 5/4″ butt ends. These actually had reasonable hail resistance and I have seen some 30-year roofs that were still serviceable. As time progressed and builders tried to save money we saw medium and light shakes being used. One light hail event and they are toast and 20 years is about it for life-span. To the best of my knowledge shakes are not used in any new construction and the only replacements that I see are in neighborhoods where the residents have not been able to change covenants that allow only shakes. Check before you buy if you are thinking of replacing shakes with ANYTHING else.
Two roof types that you will find on existing homes but which are no longer being installed are “Woodruff” and “Permatec”. Woodruff is “pressed-board” product made from sawdust and glue. I was to be a shake replacement but better. Some of it has held up reasonably well and may provide a 20 to 25 year life but too much of it deteriorated. Inspect this roof carefully. There are far fewer Permatec roofs around. This too was the man-made answer to wood shakes, did not hold up and was the subject of a class-action suit resulting in large payments to home-owners.
I am beginning to see what are called “stone coated steel” simulated shake roofs being used as replacements. I have observed that in some of the older installations, the stone coating has begun to come off. I do not know if that is a condition that has been addressed with some of the newer products.
The above options cover probably 95% of the roofs that I see. There is the occasional metal roof and some other “simulated shake” roofs. I have not tried to address flat roofs in this post and will save those for another.
The Process and The Permit
First, hire a really reputable contractor. If one tells you that you do not need a permit move on. Get references, call them and look at the work. Make sure that the permit is not just issued, but also closed out with a final inspection. I recently had a transaction where the inspection resolution required the installation of a new roof “in accordance with local building code and properly permitted”. I went by the property just to check progress, saw some things that did not look quite right and called the building department only to learn the work had not been permitted. I reported the address and when I went by the next day the old roof coverings were being properly removed and the code-required, new solid decking was being installed. If you don’t have an agent on your side, you just need to be on top of the work.
These were just the high points!
Contact me with questions and/or leave your comments and your roof experiences below, particularly if you can add to everyone’s knowledge.
Russ Murray 303-721-1100, ext 1 russ@buyerbroker-denver.com
Stucco and/or EIFS – A Review
Why Is There More To Discuss?
I have just recently had an experience with a consumer asking my opinion regarding a home that is under-contract with the inspector having identified 16 major cracks in the synthetic stucco membrane. They elected to not be represented for this transaction so my only advice was to refer them to a qualified EIFS inspector. What I wanted to say was “Move on to another home. There is just too much risk”. That last comment is a bit of a departure from my advice over the past few years and is the result of the problem of synthetic stucco exteriors growing, not shrinking.
Let’s First Define The Products - Stucco - EIFS – Hard Coat
Traditional stucco is a cement based product that has been used for centuries. It is applied over wire mesh in two or three layers with a waterproof membrane installed first to protect the house framing. Cement stucco itself is not waterproof and “breathes” so that moisture that may penetrate has an opportunity to escape and the waterproof membrane prevents moisture from getting to the wood framing members.
The history of synthetic stucco is much shorter. It was first used in Europe post WWII and was primarily applied to their typically masonry buildings as a repair and update. While there is some cement in the product it also has epoxies which provide some flexibility but which also render it waterproof. That was not a problem with application over a masonry structure.
When it began to be used in the United States in the 50’s and 60’s, builders saw it as a less expensive alternative to traditional stucco. As energy conservation took root, the ability to apply it over a foam insulating panel became attractive. With the foam insulation underneath, the “system” became known as “exterior insulating and finish system” (EIFS). Synthetic stucco installed without the insulating sheets is sometimes referred to as “hard coat” but this can also be used to reference cement stucco. Be sure you know which. There is a difference.
The BIG Problem With Synthetic Stucco
In short, it does not allow moisture that gets behind it to escape. Unlike cement stucco, synthetics must adhere to the structure and therefor a waterproof membrane cannot be applied. I thought for some time that the application without the foam board was acceptable. The more I read and see, the more I am convinced that it is problematic either way.
The result of the trapped moisture is usually mold growth. If caught early it can be mitagated. If not, it can grow into “black mold” which can affect the health of occupants.
In the perfect world, the synthetic material would be installed in strict accordance with manufacturers recommendations and then MAINTAINED in accordance with those same recommendations by the home owner. There would be no problems. Listen, I have seen hundreds of these homes and have seen only a very few that were installed and maintained correctly. The installers take shortcuts or use poorly trained workers, the general contractor trusts the sub contractor and/or does not become familiar with the product and finally, the home owner sees stucco as a “maintenance free” product.
But I Already Own An EIFS House or I Love This House And Want To Buy It
If you are an owner walk around your house carefully and look for any cracks. Look very careful at all penetrations; windows, deck rails, lights, etc. If you see any cracks or openings it is time to bring in a qualified EIFS inspector. The inspector will be able to tell you if there is moisture behind the walls and make recommendations for repair and/or maintenance. If you are lucky and there is no moisture problem, put yourself on an annual inspection and maintenance program. If problems are identified, they should be corrected and then begin regular maintenance.
If you really, really want to purchase one of these EIFS homes, make sure that you find a QUALIFIED EIFS inspector. You will probably need permission from the seller for some moderately “destructive” testing. (1/8 inch holes that are then re-sealed.) I have never seen an EIFS house come through with less than several thousands of dollars of repairs with one estimate for $70,000 because of mold.
Want An Agent To Represent You Who Cares About This Stuff?
That be me! I have been around and involved in construction and try to stay up to date on what is happening. You will benefit from my business practice of always and only representing the interests of my buyer-clients.
Russ Murray 303-721-1100 russ@buyerbroker-denver.com